Local Economic Outlook Dire in Hard-Hit EU Countries

Greeks are by far the most negative; pessimism soars Portugal and Italy

by Jan Sonnenschein

BRUSSELS -- Europeans' outlook on economic conditions where they live remains rather bleak in 2011. A median of 25% of residents in 25 EU countries that Gallup surveyed say their local economic situations are getting better, while a median of 38% say they are getting worse. Greeks are the least hopeful: 2% say their local economies are improving.

The percentage of Greeks who say local conditions are getting worse increased nine percentage points to 81% this year as Europe's debt crisis deepened, but they are not alone in their growing pessimism. Negativity soared 19 points in Italy between 2010 and 2011. Hungarians, Poles, Slovenes, Britons, and the Irish are also increasingly gloomy about local economic prospects.

Perceptions about local economic conditions improved primarily in those countries where the economy was already performing comparatively well in 2010, illustrating the variety of economic situations in Europe now. Germany, the EU's economic powerhouse, saw optimism about local economic conditions increase by 13 points. Slightly less than half of Finns and Germans (48% and 47%, respectively) are upbeat about the current direction of their local economies, making them the most optimistic in the EU. Economic confidence also shows signs of rebounding in the Luxembourg, France, Lithuania, Austria, the Czech Republic, and Slovakia.

Implications

Gallup's surveys illustrate the disparities in perceptions about local economic conditions across the EU. They also show that this gap is widening, with optimism rising in a group of Northern and Western European countries, led by Germany, while most of Southern and certain parts of Eastern Europe fall behind. To reverse the process of Europe drifting apart, its politicians need to find new strategies on how to boost the economic competitiveness of cities and regions in those countries most affected by the crisis. If these countries fail to return to growth quickly, they will experience even greater difficulties in repaying their debts, which in turn could result in a breakup of the eurozone.

Results are based on face-to-face and telephone interviews with approximately 1,000 adults in each EU member state between March and June 2011. For results based on each sample of national adults, one can say with 95% confidence that the maximum margin of sampling error ranged from a low of ±3.5 percentage points to a high of ±4.0 percentage points. The margin of error reflects the influence of data weighting. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

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Gallup's Economic Confidence Index registered -47 for the week ending Nov. 6, down slightly from the -44 and -46 readings seen in the last two weeks of October. Still, confidence is slightly improved from where it stood from July through early October.

Greeks' confidence in their country's national government hit an all-time low of 18% earlier this year, and their faith in their financial institutions has fallen sharply since 2005. Neither trend bodes well for Greece's economic restructuring and recovery.

Residents of Qatar and Oman are the most optimistic about their economies of 16 countries Gallup surveyed in the Middle East and North Africa in early 2011. Residents of Lebanon, Iraq, Yemen, the Palestinian Territories, and Bahrain are among the least optimistic.